Wednesday, June 26, 2019

We have noted, with little chagrin, that America’s great blue cities are disintegrating. Whether Los Angeles, San Francisco, Chicago or Baltimore… these cities are suffering from homeless encampments, high crime and drug epidemics. In Los Angeles, typhus seems to have made a comeback.

But, now, for those of us, like your humble blogger, who live in New York City, the bell seems to be tolling. New York City and New York State have gone deep blue, and the attendant social pathologies are beginning to make their presence known.

For many years the city was well-enough led, by Rudy Giuliani and Michael Bloomberg. Now, under the aegis of Comrade Bill de Blasio, things are beginning to take a turn toward the worst.

Dragging business practices, skyrocketing taxes, telecommuting, and loss of special status is a toxic mix for New York. Among young people, New York is becoming passe. During recent years, both the city and the state of New York have lost residents, as waves of educated and high earning millennials have fled. In fact, more than 46 percent of New Yorkers of all ages moving out of the state are in the bracket earning at least $150,000.

The Empire State budget is in near freefall, in no small part due to lower revenue from middle class and upper class workers, while growing states like Texas and Florida are in surplus. Governor Andrew Cuomo noted a $2.3 billion hole in the state budget earlier this year, caused largely by oppressive policies that have gutted the local population and economy. More than 450,000 people moved out of New York in the last year alone.

New York is filled with rich people, says Mayor de Blasio. They can afford to be taxed. Apparently, not so much any more:

In the Big Apple, the tax burden on high earners is onerous. The local government is reliant on the top 10 percent for over 70 percent of taxes paid, with the top 1 percent paying more than the bottom 90 percent combined. Any efforts to help the most needy citizens are heavily dependent on the city keeping its reputation as a driver of the national economy. The accelerating outflow of middle class and upper class residents will no doubt tarnish that. As steep declines in revenue hit, spending cuts will burden the urban poor rather than the bureaucrats.

The current spending levels are likely unsustainable for the Big Apple in the long term. The New York City Council passed a $93 billion budget, which includes spending hikes of 6 percent for salaries, 9 percent for other employee benefits, 9 percent for debt service, 11 percent for health insurance, 12 percent for public assistance funding, and more. This local budget also set aside a new line item for taxpayer funded abortions, an army of new social workers, and even a package for the Green New Deal.

If New York continues to lose taxpayers in droves, the city will not be able to fund its current initiatives, let alone new spending increases. As the exodus further dwindles local revenue, public programs will eventually require massive cuts. Meanwhile, increased pension spending will eat up any slack the city has left. The pension plans are already underfunded to the tune of tens of billions of dollars. Retirement spending comprises nearly a quarter of the annual budget and will only continue growing.

We have seen this picture before:

Whenever push came to shove in the past, cities like Chicago and Detroit prioritized bureaucratic spending and honoring pensions over funding public programs and infrastructure. If New York takes a similar route, the people most dependent on campaign promises will be left behind. The Big Apple has been down this path before with the struggling economy and massive spending hikes of the 1970s. New York leaders overpromised and underdelivered, while moderate mayors like Fiorello LaGuardia were unfortunately replaced by increasingly radical or incompetent politicians.

Democratic politicians talk about taxing the rich as though their wealth were a bottomless punch bowl. Apparently, such is not the case:

Those very same wealthy people that politicians have demonized to gain votes are the actual linchpins for the spending largesse of progressives. Once high earners are gone, soon followed by middle class taxpayers, the promises of democratic socialism by Mayor Bill de Blasio will also vanish. Many of those who remain in New York will be those without the means to leave.

Now that Bernie Sanders imagines that he is going to tax Wall Street trading, how long will it be before Wall Street banks move their trading operations off shore? I will conclude with a recent proposal: if we want to eliminate student loan debt why not tax university endowments?